Bob gets initiative 18,
Joe gets initiative 12,
and their foes get initiative 14.
Bob is fully aware combat is taking place by initiative 14, but has not yet acted.
Bob wants to see what Joe does in response to being attacked.
Bob delays his action using the "Delay" action, which according to the PathFinder table "Actions in Combat" is categorised as a "No Action".
Is Bob still flat-footed when their foes attack both Bob and Joe?
This seems a case of a logical advantage (Bob can make a better choice about what to do) causing a RAW disadvantage (flat-footed) for no sensible reason.
I would posit there are words missing from the flat-footed condition.
A character who has not yet acted during a combat is flat-footed, unable to react normally to the situation. A flat-footed character loses his Dexterity bonus to AC and Combat Maneuver Defense (CMD) (if any) and cannot make attacks of opportunity, unless he has the Combat Reflexes feat or Uncanny Dodge class ability.
Characters with Uncanny Dodge retain their Dexterity bonus to their AC and can make attacks of opportunity before they have acted in the first round of combat.
For RAI would it make more sense to read:
A character who has not yet had the opportunity to act during a combat is flat-footed, ...
Sorry, question is simply "by RAW is Bob still flat-footed?" but I'd appreciate comment on the RAI vs RAW issue.